The location-based app Foursquare recently rolled out sponsored ads for a pilot group of brands. These sponsored ads would be activated for a user when they're in the vicinity of the retailer and using the "Explore" function within the app. These "promoted updates" will encourage users to check in at the store and offer special promotions. In the past some retailers on Foursquare have offered promotions, but these must be searched out by the user. The new promotions show up presumably when a user is searching in an area using the "Explore" feature.
Among the 20 or so retailers participating in the pilot program are Macy's, Gap, JC Penney, Hertz, and Best Buy. The current pricing model is cost-per-action, but the pilot program will ultimately determine the best metric to use.
I think these ads are a relatively unobtrusive way to advertise on Foursquare. I can also see how many users would love to be notified of sales and specials nearby, much like Groupon Now. But I wonder if the reach will be worth the cost to advertisers. Foursquare has 20 million users, but they don't report how many of these users are actually using the Explore feature. I also don't know how many users are actually active users, who check in to Foursquare on a regular basis. I use Foursquare, but I don't check in everywhere I go. Sometimes I can go weeks without using it. However, their recent redesign and the Explore feature are a great improvement and definitely make me want to use the app more often.
Macy's is hoping to reach female milennials (age 18-30). I'm in that target group. Will a Foursquare offer make me shop at Macy's? Probably not. It will remain to be seen how effective advertising on Foursquare will be. I just don't want to see a Foursquare where every retailer that comes up in the Explore feature is a sponsored retailer.
Read the entire article in AdAge.
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